The portfolio management team
meets formally twice a week to
review the economy and its impact
on securities markets and client
portfolios. The team regularly
reviews sector and duration
targets for each fixed income
portfolio and discusses any
adjustments that need to be made.

Equity Indexing

Cavanaugh Capital Management (CCM) invests in a combination of equity index funds and exchange-traded funds (ETFs) as opposed to selecting active equity managers for client portfolios. This passive equity management strategy offers exposure to domestic and international, large-, mid- and small-cap companies. CCM's equity approach combines the advantages of index funds with professional monitoring, consultation, and reporting.

Benefits of Equity Indexing

1. Most mutual funds do not consistently outperform market averages.
2. Indexing is inexpensive.
3. Index funds are generally more tax efficient than managed funds.
4. If one owns the entire market, one will get better than average market performance

Types of equity portfolios include, but are not limited to, the Multi-Asset Class (MAC) Strategy and the Equity-Only Strategy.

Multi-Asset Class (MAC) Strategy

The MAC strategy is a broadly diversified, low risk, low-cost, passive investment strategy based on the historical and fundamental relationships of multiple asset classes. Using thorough and adept diversification, the MAC strategy reduces exposure to swings in the U.S. stock market and has historically produced greater returns with significantly lower risk, when compared to traditional equity-centric strategies. Of course, past performance does not guarantee future results. The MAC strategy includes allocations to U.S., International, and Emerging Markets equities as well as REITs and Commodities. The strategy is completely transparent, highly liquid and can be tailored to investor goals and objectives.

The MAC strategy may be appealing to investors seeking low cost, lower risk strategies, or small institutions that might not qualify for participation in low-volatility hedge funds. By using Morningstar data, CCM determined that its MAC fee schedule is competitive with, and in many cases lower than, the average net expense ratios of 1) all balanced or asset allocation mutual funds, 2) Institutional Class balanced or asset allocation mutual funds, and 3) all balanced index funds.

Visit the News page for articles on the MAC strategy.